FOR IMMEDIATE RELEASE Contact: Andy Davis, (202) 224-6654

Thursday, March 21, 2002

 

Statement by Senator Ernest F. Hollings on the Introduction of

"The Consumer Broadband and Digital Television Act of 2002"

March 21, 2002

Mr. President, I rise along with Senators Stevens, Inouye, Breaux, Nelson, and Feinstein to introduce "the Consumer Broadband and Digital Television Promotion Act of 2002," legislation that will promote broadband and the digital television transition by securing content on the Internet and over the nation’s airwaves.

For several years the private sector has attempted to secure a safe haven for copyrighted digital products, unfortunately with little to show for its efforts. The result has been an absence of robust, ubiquitous protections of digital media which has lead to a lack of content on the Internet and over the airwaves. And who has suffered the most? Consumers, as they are denied access to high quality digital content in the home.

The reality is that a lack of security has enabled significant copyright piracy which drains America’s content industries to the tune of billions of dollars every year. For example, the movie studios estimate that they lose over $3 billion annually by way of analog piracy. In order to pirate copyrighted movies via analog formats, an individual makes an illegal copy of the movie (sometimes by taping it in a movie theater with a personal video recorder) and then distributes it, in analog form, at discount. However, because subsequent copies of analog movies degrade over time, there is a limit to the success of this type of piracy.

In a digital age, however, the piracy threat is exponentially magnified. So on the Internet, copyrighted content – be it a movie, a book, music, or software – travels in a digital language of 1s and 0s, and every copy of that content, from the 1st to the 1000th is as pristine as the original. Also, unlike an analog pirated movie, which must be physically packaged and transported, a digital copy can be sent around the world on the Internet with a single click of a mouse. The copyright industries are justifiably worried about distributing their content on the Internet absent strong copyright protection measures. As Internet access becomes increasingly available over high-speed, broadband connections, these worries will only heighten.

It should be noted, however, that the Internet is not the only threat to unprotected digital content. Digital video programming is also subject to a large piracy threat. Rapid advances in consumer electronics make it easier to steal copyrighted content. Newly developed digital compression and memory technologies make it possible to store two complete movies on a device the size of a postage stamp. Today, digital media can be transmitted over wired or wireless channels and played and stored on a host of consumer electronics devices. By and large, these are positive developments for consumers.

But any device that can legitimately play, copy, or electronically transmit one or more categories of media also can be misused for illegal copyright infringement, unless special protection technologies are incorporated into such a device. Unfortunately, as technology has advanced, copy protection schemes have not kept pace, fostering a set of consumer expectations that at times actually promote illegal activity on the Internet. For example, according to a Jupiter Media Matrix report, over 7 million Americans use technology on the Internet to swap music and other digital media files. More recent news reports place this number at over 11 million. While some of this activity is legal, much of it is not.

Every week a major magazine or newspaper reports on the thousands of illegal pirated works that are available for copying and redistribution online. Academy award winning motion pictures, platinum records, and Emmy award winning television shows – all for free, all illegal. Piracy is growing exponentially on college campuses and among tech savvy consumers. Such lawlessness contributes to the studios and record labels’ reluctance to place their digital content on the Internet or over the airwaves.

At the same time, millions of law abiding consumers find little reason to spend discretionary dollars on consumer electronics products whose value depends on their ability to receive, display and copy high quality digital content like popular movies, music, and video games. Accordingly, only early adopters have purchased high definition television sets or broadband Internet access, as these products remain priced too high for the average consumer. The facts are clear in this regard. Only two million Americans have purchased HDTV sets. As for broadband, rural and underserved areas aside, there is not an availability problem. There is a demand problem. Roughly 85% of Americans are offered broadband in the marketplace but only 10-12% have signed up. The fact is that most Americans are averse to paying $50 a month for faster access to email, or $2000 for a fancy HDTV set that plays analog movies. But if more high-quality content were available, consumer interest wou! ld l ikely increase.

By unleashing an avalanche of digital content on broadband Internet connections as well as over the digital broadcast airwaves, we can change this dynamic and give consumers a reason to buy new consumer electronics and information technology products. To do so requires the development of a secure, protected environment to foster the widespread dissemination of digital content in these exciting new mediums.

Although, it is technologically feasible to provide such a protected environment, the solution has not been forthcoming through voluntary private sector negotiations involving the industries with stakes in this matter. This is not to say, however, that those industries do not recognize the tremendous economic potential to be derived from a proliferation of top notch digital content to consumers in the home. The movie studios, and the rest of the copyright industries, for example, are tremendously excited about the possibility of providing their products to consumers over the Internet and the digital airwaves, provided they can be assured that those products’ copyrights are not infringed in the process.

Although marketplace negotiations have not provided such an assurance, a solution is at hand. Leaders in the consumer electronics, information technology, and content industries are some of America’s best and brightest. They can solve this problem. The consumer electronics and high tech industries claim they are ready to do just that. America’s top high-tech executives sent me a letter three weeks ago to that effect. While, I want to believe them, industry negotiations have been lagging. Both sides share some blame in this area. But the blame games need to end. Its time for results, not recriminations.

I believe the private sector is capable – through marketplace negotiations – of adopting standards that will ensure the secure transmission of copyrighted content on the Internet and over the airwaves. But given the pace of private talks so far, the private sector needs a nudge. The government can provide that nudge, and in doing so, continue the government’s longstanding role in promoting (and sometimes requiring) the implementation of technological standards in electronics equipment to benefit consumers. We debated the merits of such an approach in the Commerce Committee on February 28, 2002 when the leaders of the copyright, consumer electronics, and information technology industries testified as to their distinct views on this issue. At that hearing, every Senator and every witness agreed that the problem of digital piracy requires resolution.

Specifically, our hearing demonstrated that there are three discrete problem areas that merit government intervention. First, is the piracy threat presented toward unprotected digital broadcast television. Over the air broadcast digital signals cannot be encrypted because the millions of Americans who receive their signal via antennas cannot decrypt the signal. As a result, digital broadcast signals are delivered in unprotected format and are subject to illegal copying or redistribution over the Internet upon transmission. The technology exists today to solve this problem. It has been referred to as a "broadcast flag" which would instruct digital devices to prevent illegal copying and Internet retransmission of digital broadcast television. Consumer electronic devices would respond to the technology and prevent copyright infringement. However, because not every device would be required to respond to the technology, ubiquitous response requires a mandate ! by g overnment.

The second problem is commonly referred to as the "Analog hole." As protected digital programming (usually delivered over satellite or cable, but also available on the Internet) is decrypted for viewing by consumers on legacy analog devices – most frequently on television sets – the programming is temporarily "in the clear." At this point, pirates have the opportunity to take advantage of an "Analog hole" by copying the content into a digital format (i.e. re-digitizing it) and then illegally copying and/or retransmitting the content. The technology to solve this problem either exists today, or will be available shortly. Regardless, the solution is technologically feasible. As with the "broadcast flag" the solution to the "Analog hole" will require a government mandate to ensure its ubiquitous adoption across consumer devices.

The final problem poses the greatest threat. Literally millions of digital files of music and videos are illegally copied, downloaded, and transmitted over the Internet on a regular basis. Current digital rights management solutions are insufficient to rectify this problem. Some consumers resorting to illegal behavior do so unknowingly. Many others do so willingly. Regardless, consumers desire high-quality digital content on the Internet, and it is not being provided in any widespread, legal fashion. Fortunately, a solution to this problem is also technologically feasible. It, too, will require government action, including a mandate to ensure its swift and universal adoption.

While industries are at odds as to how to solve these critical content protection problems, the legislation we introduce today provides us with the tools to break the logjam. Specifically, the legislation requires the content, consumer electronics, and information technology industries to come together with representatives of consumer groups to develop standards, technologies, and encoding rules to safeguard digital content so that it will be made more readily available to consumers without being subject to piracy. The affected parties would have one year to reach agreement. The technologies would then be incorporated into all digital media devices to ensure universal protection for digital content and universal access to such content for consumers. The deadline on industry would work in the following fashion: if they come together to solve these problems in private sector talks, we will empower government enforcement so that all consumer devices comply. If they don! ’t, the government, in consultation with the private sector, will have to step in.

America’s creative artists deserve our protection. Our copyright industries are among our greatest economic and creative assets. The Framers recognized that innovation and creativity was instrumental to our country’s economic health when they empowered Congress, in the Constitution, to protect copyrighted products. Now, however, copyrighted media products are delivered digitally, and copyright infringement is more difficult to detect and prevent. That is why strong technological protections need to be layered on top of the copyright laws, to complement the law as it exists today. Along those lines, I want to emphasize that this legislation does not alter existing copyright law. Copyright law rests squarely within the jurisdiction of the Senate Judiciary Committee. I hope to work closely with Chairman Leahy and Ranking Member Hatch to stop copyright piracy in a digital age.

Some have said that legislation is unwieldy in this area. But our legislation would not be the first time Congress imposed technological requirements to benefit consumers. And it won’t be the last. We have been here before. In 1962, under the All Channel Receiver Act, Congress mandated that all television receivers include the capability to tune all channels (UHF and VHF) allocated to the television broadcast service. More recently, in 1998, Congress required that all analog VCRs recognize a standard copy control technology (known as "Macrovision"). In the former case, the federal government and the Federal Communications Commission took the lead. In the latter case, industry first agreed upon the "Macrovision" standard which Congress later codified by legislation. So, whether Congress or industry has led the way, the results have benefitted consumers and industry, by providing Americans with wider access to programming and content.

Pursuant to the bill we introduce today, the standards, technologies, and encoding rules would work in the following manner. Digital content delivered over the Internet and over the broadcast airwaves would include instructions as to consumers’ ability to copy available content and would prevent the illegal retransmission of that content over the Internet. Digital media devices such as television sets, cable boxes, and personal computers, would be manufactured to recognize and respond to those instructions to prevent illegal copying or redistribution.

I want to stress, however, in the strongest terms possible, that the standards agreed to by industry would not be permitted to thwart legitimate consumer copying of programming in the home – for time shifting purposes, for example. Similarly, the technologies and encoding rules would be required to take into account the need to preserve fair use of otherwise protected content – for educational and research purposes for example. Specifically, our bill requires that encoding rules "take into account the limitations on exclusive rights of copyright holders, including the fair use doctrine." In addition, the legislation specifies that no copy protection technology may prevent consumers from "making a personal copy for lawful use in the home" of non pay-per-view television programming. I want to be clear on this point: no legislation can or should pass Congress in this area that does not seek to protect legitimate consumer copying and fair use practic! es.

Critics of earlier drafts of our legislation painted it as heavy handed and awkward government selection of technologies. I want to respond. We have listened to their arguments delivered in dozens of meetings with my staff, and the bill we introduce today does nothing of the sort. Under the new legislation, if the required private sector negotiations fail, the FCC will begin a process, in consultation with those same private sector representatives, to implement technologically feasible solutions. So, in practice, the private sector, even in the event of a government initiated approach, will have every incentive and opportunity to guide a solution largely on its own.

Critics of earlier discussion drafts of our legislation also claimed that it would freeze innovation and that any solutions would invariably be out of date shortly after they are selected due to the rapid and accelerated development of technology in the high tech sector. But here too we have listened and responded. Pursuant to our legislation, if the private sector determines that the selected technological solution needs to be updated or modified, they may do so. Its as simple as that. Such a change might be warranted because the technologies or encoding rules in use have been compromised by hackers or pirates. Or, technological improvements may be developed that ensure greater security for content, or more readily take into account consumers or researchers’ fair use expectations.

Regardless, in any of these instances, at any time, the legislation would allow the representatives of the content, consumer electronics, and information technology industries to implement any necessary modification of the agreed upon technologies. They could simply do so on their own, and then notify the FCC of their actions.

At every stage in the process, the private sector, not the government, has the opportunity and the incentive to grab the reins. To date, however, this has not happened. The legislation we introduce today seeks to change that.

Mr. President, I ask unanimous consent that the text of the legislation, the Consumer Broadband and Digital Television Promotion Act, be printed in the Record following insertion of these remarks.